OESA Automotive Supplier BarometerTM Q4 2022 Talent and HR November 7, 2022
Executive Summary Supplier Barometer IndexTM (SBI) SBI Score = 36; from Q3 level of 32
The barometer reflects a continued decline in executive sentiment for the fourth quarter. The index remains in pessimistic territory due to ongoing concerns over production shutdowns, and a weakening economic outlook in the U.S. and beyond. This sentiment remains pessimistic across firms of all sizes but is least acute among the smallest suppliers.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Production shutdowns due to supply chain shortages and labor availability remain the top threats to the 12month outlook.
Gaps between responsibilities and skills held steady versus year ago levels while the gap between current and expected company culture closed significantly.
Ongoing shortages of semiconductors as well as other components and materials continue to pressure the supply base, however concerns improved from the third quarter. Supplier concerns over weakness in the U.S. economy remain elevated.
Executive responses indicate that nearly 50% of suppliers have moderate to wide gaps between their current roles and responsibilities versus skills, essentially unchanged from last year. Furthermore, 48% of responses indicate that suppliers face moderate to wide gaps between current and expected company culture, down from 62% in 2021. Firms are focusing on increasing internal skill development through training and re-skilling to offset skills gaps, while continuing to leverage flexibility in their company culture.
2
Executive Summary
Scarce labor availability and competition from other sectors accelerated hourly employee turnover to extremely high levels 54% of suppliers report their monthly turnover rates for hourly employees in the U.S. at above 7.5% while noting that all positions at the plant level are extremely difficult to fill. Suppliers continue to increase wages and rely on contract employees to offset the shortage of production workers. Wage increases, signing and retention bonuses, and mentorship programs have been the most successful incentive initiatives. Suppliers with operations in Canada and Mexico indicate a substantial increase in difficulty hiring blue collar labor in comparison to last year.
Regionally speaking, the supply base expects sales to grow faster than employment in all regions of the world with exceptions in Mexico, China and the rest of Asia Pacific. Suppliers learned through the pandemic that flexibility in both schedule and location were a necessity. Over a third of suppliers have formally adopted what were temporary policies, while the majority are planning to retain these policies in the future.
Developing high performing employees internally, through training, mentorship and cross-functional job rotation, through a structured development plan are the key themes for career path and succession planning.
Cost pressures are mounting as the supply base is budgeting for a 4.3% and 3.6% increase to hourly and salary employee wages, respectively. Additionally, suppliers expect cost pressure across nearly all other benefit offerings.
Software engineers are in the most critical demand as the supply base focuses on developing strong capabilities across a growing range of advanced technologies.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
3
Supplier Outlook
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
OESA Supplier Barometer: Q4 2022 Results Describe the general twelve-month outlook for your business. Over the past three months, has your opinion become…? Current Supplier Outlook (Share of Respondents) 90 80
US Tax Reform
70 60 50 30
Japan Tsunami/ Grexit Crisis
US Trade War Escalates
COVID-19 Pandemic
Jan-2022
Jan-2021
Jan-2017
Jan-2016
10 Jan-2010
Significantly more pessimistic
Somewhat more pessimistic
Unchanged
Somewhat more optimistic
Euro Crisis Begins
20 Jan-2009
1% 0%
0% Significantly more optimistic
36
40
Jan-2015
10%11%
Jan-2014
15% 9%
Jan-2013
22%
20%
Lehman Collapse
Jan-2012
32%
Jan-2011
40%
Jan-2020
52% 47%
Jan-2019
Q4 2022
Jan-2018
Q3 2022
60%
Supplier Barometer Index: (SBI and 6m Average)
117 responses
The 12-month outlook for the fourth quarter reflects continued pessimism as concerns persist over production shutdowns and the inability to fulfill customer volumes.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
5
OESA Supplier Barometer: Q4 2022 Results By Revenue Describe the general twelve-month outlook for your business. Over the past three months, has your opinion become…? Quarterly 45.6 SBI ∆ July
43.1 Oct.
25.0 34.4 July
100%
80%
25.0 33.3
27.9 35.4
July
Oct.
July
19%
14%
18%
6%
11%
90%
Oct.
Oct. 8%
31.9 35.8 July
15%
47%
22%
Significantly more pessimistic 48%
56%
60%
58%
52%
50%
59%
44% 24%
Somewhat more pessimistic
50%
Unchanged
75%
50%
Somewhat more optimistic
30% 29%
6%
<$50 million
34% 28%
Significantly more optimistic
18%
28% 17%
0%
17%
19%
31%
20% 10%
9%
28%
70%
40%
Oct.
$50-$150 million
6%
14%
$151-$500 million
17% 6%
$501 million – $1 billion
8%
9%
>$1 billion
The outlook reflects pessimism for firms of all sizes, albeit with sequential improvement for all but the smallest suppliers.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
6
OESA Supplier Barometer: Industry Threats What are the greatest threats to the industry over the next 12 months? 0%
20%
40%
60%
80%
100%
Production shutdowns shutdowns due to supply chain issues Production due shortages to supplyand chain…
Average Rating Oct. July
3.3
2.5
Weakness the U.S. Economy Weakness in the in U.S. Economy
3.3
3.2
Labor availability constraints Labor availability constraints
3.4
3.4
Likelihood of higher interest rates Likelihood of higher interest rates
4.3
4.4
4.5
4.1
5.1
5.2
5.1
5.4
Continued issues Continued related issues torelated the COVID-19 to the COVID-19 pandemic pandemic
6.1
5.5
Implementation Implementation of new government of new government regulations regulations
6.3
6.4
Changes Changes in government tradetrade policy in government policy
6.4
6.6
Inability to fulfill customer volumes (component and raw material Inability to fulfill customer volumes (component and… shortages) sales of vehicles in programs supplied Poor sales Poor of vehicles in programs supplied External "black swan" eventevent (geopolitical, natural disaster, etc.) External "black swan" (geopolitical, natural…
1=Greatest Threat
2
3
4
5
6
7
8
9
10=Smallest Threat
Risks associated with production shutdowns and the inability to fulfill customer volumes due to supply chain shortages remain acute yet eased from July.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
7
Supplier Outlook
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Roles/Responsibilities vs. Skills - Understanding the Gaps Given competitive hiring pressures and your effort to retain and capture new talent... Are you evaluating the gaps between roles/responsibilities vs. skills in your organization?
For those indicating ‘yes’ What is the magnitude of each gap? No Wide gap gap/Aligned 9% 7%
No 16%
Yes 84%
Moderate gap 40%
Minor gap 44%
How willing are you to embrace the scope of change needed to close each gap? Not applicable Not willing 6% 3%
Very willing 41% Somewhat willing 50%
Skill gaps are consistent with last year, with 49% of respondents indicating they have moderate to wide gaps, essentially unchanged from 50% last year.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
9
Roles/Responsibilities vs. Skills - Understanding the Gaps How do you see this changing over the next 1 to 3 years?
What are you doing to adapt your organization to each of these changes? • • • •
Narrowing Gap 38%
Widening gap 29%
No Change 33%
• • • • • • • • • • • • • • • • • • • • •
Internal culture related surveys, improved Constantly looking at how to align our roles with the required skills to perform the job. We are implementing a new gap matrix to track this as well. Heavy recruiting and implement new or reinforce retention strategies We use automation, equipment measurement and process design to reduce complexity. From a hiring perspective, we continue to evaluate job descriptions based on our changing business HR health assessment and planning. Diversity/inclusion programs. Non-US residents Evaluating needs globally (offshore resources) Communicate, transparency, team member contribution and buy-in Launched a centralized learning team to focus on a transition plan for our talents required for the future. Remapping, training, some external hiring Increase bench of early career talent. Training and reinforcement Employee Surveys Exit interviews Annual Performance Reviews Working to ensure the correct employees/skill sets are in the correct roles Build your own Intensive training programs and increased wages Assessing and assigning paths for skill adoption Developing internal pipelines of talent Focusing hiring efforts, training, recruiting changes, retention initiatives Focus on SW engineers, STEM backgrounds Additional training, rotation into new roles, etc. Continuous assessment, people development, new hires Having other departments pick-up some of the additional work-load. Training employees, recruiting talent Reskilling, recruiting
Suppliers are focused on developing talent internally through training or re-skilling, revamping hiring practices and increasing their flexibility.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
10
Current Culture vs. Expected Culture - Understanding the Gaps Given competitive hiring pressures and your effort to retain and capture new talent... Are you evaluating the gaps between current vs. expected culture in your organization?
For those indicating ‘yes’ What is the magnitude of each gap?
No 14%
Wide gap 10%
No gap/Aligned 10%
How willing are you to embrace the scope of change needed to close each gap? Not applicable Not willing 6% 5% Very willing 34%
Yes 86%
Moderate gap 38%
Minor gap 42%
Somewhat willing 55%
Cultural gaps decreased in comparison to 2021, with 48% of respondents indicate moderate to wide gaps between their current and expected culture, down from 62% last year.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
11
Current Culture vs. Expected Culture - Understanding the Gaps How do you see this changing over the next 1 to 3 years?
What are you doing to adapt your organization to each of these changes? • • • •
Narrowing Gap 42%
Widening gap 26%
No Change 32%
• • • • • • • • • • • • • • • • • • • • •
Internal culture related surveys, improved communication, community work. Work from home does not work, too much loss of knowledge transfer and sense of belonging to the company group. We have a great culture; however, it is changing a bit and has been affected by Covid. In person work helps bring everyone closer to allow team concept vs. individuality. Team players will stay and individuals will probably change or leave Launched EES surveys and action plans to address gaps and make sure we are ready for the next generation to join us. New work on culture and teamwork Different work "ethics" in different geographies...not balanced Internal focus, attention and programs/projects to improve culture Implemented hybrid work environment. Continue with increased flexibility; maturing in its application / balance Balance the fine line between flexibility and collaboration. Walking the talk from senior management. Defining what the company DNA is 360 on management Level Drive new inclusive culture New leadership in customer and internal relations. Changing work policy for flexibility Focusing hiring efforts, training, recruiting changes, retention initiatives Hybrid / flexible work environment expanding to many associates in order to retain / attract talent Continue to have a clear back fill plan bringing the right diversity up through the ranks. We already implement a Hybrid work scheme. The right people for the culture and business needs - continuous assessment Enhanced PTO policies. Flexible work environments Based on the current work environment allowing employees more flexibility with remote working Surveying employee sentiment Committing and communicating the expected culture
Most suppliers expect their cultural gaps to narrow over the next few years. Most are focusing on flexibility to narrow the gap.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
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Programs to Attract and Retain Talent How do you see this changing over the next 1 to 3 years? Fewer Programs 4%
No Change 27%
More Programs 69%
What are you doing to adapt your organization to each of these changes? • • • • • • • • • • • • • • • • • • • • • • •
Improved social media, hiring more in house recruiting, hybrid work from home This is a big focus for us starting this year and moving forward. Already have attractive programs in place to attract and retain talent Implementing or reintroducing team building or work lifestyle changes into our culture and benefits. Different work setup, different hours, temp work, flex hours, more work from home options No hiring after attrition Be competitive in this space More incentives for labor positions Diversity and inclusion. Communication and involvement Increased flexibility, development plans, focus on well being with annual pulse survey follow up. Looking into other industries. Multiple compensation / benefits element; access to remote work. 1. Early and mid career rotational programs. 2. Taking bets on early career talent. Utilizing recruitment organizations that have experience with our company and culture to attract the appropriate candidates. New customers and programs Competitive pay; more employee engagement activities; more employee recognition; More specialized employee training offered Build your own. More intensive change programs Remote work. Pay increases Continuous assessment, trial and error of new programs, people development, culture vision More intern hiring Modify policies Going into 2023 have budgeted additional incentives to retain employees (car allowance & additional bonuses) Surveying employee sentiment
Suppliers will continue to leverage their flexible work environments as a means of attracting and retaining talent. Increased benefits and incentives are also a major theme.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
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Employment Issues: Flexibility During the past 2 1/2 years of volatility, high flexibility in both location and flexibility was required to maintain operations and retain talent. Which of the following programs does your company expect to retain going forward?
0%
20%
Flexible Schedule
37%
Remote Workplace Policy
36%
Flexible Work Space Cross-functional Job Rotation Increased Paid or Unpaid Time-off Allowances Formally adopted
60%
80%
47% 40%
25%
46%
11%
30%
100% 7% 8%
11%
46%
5%
Planning to retain
40%
14%
26%
47% 8%
Planning to eliminate
50% Never implemented
The pandemic has profoundly impacted how and where people work, with the majority of suppliers planning to retain a flexible schedule and work environment going forward.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
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Employment Issues: Regional Growth Expectations Looking at your current global footprint, how do you anticipate regional employment levels shifting over the next five years? 0% Regional employment will grow faster than the regional share of corporate sales
Regional employment will grow equal to the regional share of corporate sales
Regional employment will grow slower than the regional share of corporate sales
United States
Salary Hourly
20%
40%
13% 12%
Canada
Salary 6% Hourly 3%
Mexico
Salary Hourly
Europe
Salary 5% Hourly 2%
60%
49% 57%
100%
38% 31%
47% 53%
47% 44%
34% 32%
57% 59% 49% 52%
9% 9% 46% 46%
China
Salary Hourly
13%
67%
Rest of Asia Pacific
Salary Hourly
20% 14%
65%
South America
Salary Hourly
25%
15% 9%
80%
65%
11% 20%
66%
44% 58%
15% 22% 41% 33%
Regional share of corporate revenue will grow faster than employment in most areas of the world. Mexico is a lone exception along with salaried personnel in China and Rest of Asia Pacific.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Employment Issues: Regional Voluntary Turnover Estimate your year-to-date 2022 monthly voluntary turnover rates for salary and hourly personnel.
United States Salaried Workers Less than 2.5% 2.5 - 5% 5 - 7.5% 7.5 - 10% 10 - 15% 15 - 20% More than 20%
Canada
Mexico
2%
5%
9%
11%
6%
6%
25% 8%
12%
4%
Wtd. Avg.* 5.8%
Wtd. Avg.* 5.9%
12% 50%
6%
8%
27%
23%
40% Wtd. Avg.* 7.0%
9%
19%
16%
Hourly Workers Less than 2.5% 2.5 - 5% 5 - 7.5% 7.5 - 10% 10 - 15% 15 - 20% More than 20%
13%
4%
7%
9%
14%
11% 19%
Wtd. Avg.* 10.0%
7% 7%
18%
19% 15%
Weighted average assumes the mid-point of each range, >20% = 22.5%
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Wtd. Avg.* 6.1%
44%
16%
10% 9%
Wtd. Avg.* 9.2%
9% 11% 18%
19%
21%
Employment Issues: Labor Acquisition in the U.S. Based on current open requisitions, rate each of the following job classification and positions (most critical to least critical) where you have HR shortages 1=Most critical 0%
10%
20%
30%
Hourly-production
63%
Hourly-skilled trades
62%
Engineering
2
3
4
40%
50%
13%
29%
5%
9%
Senior Executives
4%
12%
10%
17% 31%
12%
90% 9% 9% 8%
23%
28% 27%
80%
21%
38%
18%
Sales and marketing
70%
23%
31%
General management
60%
24%
38%
Technicians
Wt. Avg.
5=Least critical
Q4 2022
Q3 2021
3%
1.5
1.6
3%3%
1.6
1.6
5%
2.1
2.3
2.1
2.3
3.2
3.6
3.7
3.5
4.1
4.2
100%
6%
25% 28%
62%
The supply base continues to struggle to attract and retain employees. This is most acute for hourly production workers and skilled trades.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
17
Employment Issues: Labor Acquisition in Canada Based on current open requisitions, rate each of the following job classification and positions (most critical to least critical) where you have HR shortages 1=Most critical 0%
10%
20%
30%
Hourly-skilled trades
2
3 40%
4
Wt. Avg.
5=Least critical 50%
60%
70%
61%
Hourly-production
26%
57%
Technicians
17%
24%
Engineering
38%
30%
General management
6%
12%
Sales and marketing
6%
12%
Senior Executives
6%
13%
15%
29% 24% 13%
80%
17% 29%
45%
35% 47%
Q4 2022
Q3 2021
4% 4% 4%
1.7
2.2
4% 4%
1.8
2.4
5% 5%
2.3
2.4
10%
2.4
2.8
3.5
4.0
3.5
4.1
4.4
4.3
90%
100%
18% 12%
69%
Scarcity of hourly employees increased substantially in Canada over the past year. Additionally, engineers became increasingly difficult to attract.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
18
Employment Issues: Labor Acquisition in Mexico Based on current open requisitions, rate each of the following job classification and positions (most critical to least critical) where you have HR shortages 1=Most critical 0%
10%
20%
Hourly-skilled trades
20%
Technicians
Senior Executives
4
40%
9% 5% 8%
60%
70%
80%
31%
15%
37%
21% 17%
17%
43%
36%
Q3 2021
4% 4%
1.8
2.1
6% 4%
1.9
2.2
2.5
2.5
2.5
2.6
3.3
3.5
4.0
3.9
4.0
4.0
6%
34%
6%
17%
22%
33% 25%
Q4 2022
90% 13%
21% 24%
16%
Wt. Avg.
5=Least critical 50%
52%
Engineering
Sales and marketing
30%
3
48%
Hourly-production
General management
2
100%
6% 8%
38% 47%
Shortages of plant workers has worked its way into Mexico, while shortages of workers with other skillsets stayed consistent year over year.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
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Employment Issues: Filling Open Positions Rate each of the following reasons that you believe prevent you from filling the majority of your open requisitions.
1=Most prevalent 0%
2
10%
20%
Lack of qualified candidates
Benefits
60%
23%
11% 17%
5% 7%
18%
16%
22%
22%
20% 15%
1.7 1.8
12%
10%
2.5
2.4
3.2
2.9
3.3
3.4
3.4
3.3
3.5
NA
3.5
3.6
3.6
3.5
3.6
3.5
18% 26% 13% 20%
37% 31% 40%
Lack of qualified candidates remains the top hiring constraint as quality labor remains scarce. Competition from other industries and wage demands remain prevalent.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
1.8 2.0
30%
34%
Q4 2022 Q3 2021
8%
5% 4%
31%
15%
100%
15%
23%
28%
20% 11%
90%
23%
36%
18%
80%
Wt. Avg.
8%
23% 30%
23%
7%
70%
43% 31%
7%
Inflexible remote work structure 4%
Company awareness/reputation
50%
5=Least prevalent
37%
23%
Advancement opportunities
Industry reputation
40%
33%
Wages
Position location
30%
4
47%
Competition from other industry sectors
Perceived work/life balance
3
Employment Issues: Filling Open Positions Has your company implemented any of the following initiatives in order to offset the shortage of production workers? 0%
20%
40%
Increased wages
Increased benefits Overstaffing
35%
62%
Signing bonus
38%
55% 44% 39% 33%
45% 56% 61% 67%
27%
73%
Yes
100% 13%
65%
Mentoring by senior team members
Retention bonus
80%
87%
Contract employees
Increased part-time employees
60%
No
How successful were the initiatives?
0%
20%
40%
Increased wages 8% Contract employees Mentoring by senior team members
14%
60%
18%
23% 16%
80%
Increased part-time employees 8%
Increased benefits 7% Overstaffing
10%
70%
17%
18%
64% 72% 67%
17% 10% 10% 23%
Completely successful
Somewhat successful
Somewhat unsuccessful
Completely unsuccessful
Increased wages, mentorship, and retention and signing bonuses have been the most successful programs in offsetting the shortage of production employees.
100% 8%
62%
Most successful initiatives
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
80%
79%
Signing bonus
Retention bonus
60%
10%
Employment Issues: Engineer Shortages Based on current open requisitions, please rate the type of engineering positions that your organization is having difficulty filling
1=Most critical 0%
2
10%
Software Engineer/Computer Scientist
30%
4
40%
50%
42%
Mechanical Engineer
28%
Electrical Engineer
28%
Industrial Engineer
13%
Chemical Engineer
14%
Aerospace Engineer
20%
3
7%
7%
60%
70%
80%
32%
36%
18% 27%
19%
Q3 2021
9% 4%
2.0
2.4
8% 3%
2.2
2.4
10%
2.3
2.3
10%
2.8
2.9
3.2
2.9
4.2
4.3
28%
37%
19%
Q4 2022
90%
14%
34%
34%
Wt. Avg.
5=Least critical
7% 16%
25%
100%
22% 50%
Employers face shortages for software and mechanical engineers amid strong demand. Hiring became increasingly difficult in comparison to last year.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Employment Issues: Benefits Package Changes For next year, in the United States identify how your benefit packages are expected to change compared to this year. Increase more than 10%
Increase 5-10%
Hourly employee wages
Increase 1-5%
No Change
0%
20%
10% 7%
401(K) match
60%
8%
46%
27%
80%
90%
100%
Q4 2022
Q3 2021
4.3%
5.4%
3.6%
2.9%
2.2%
2.2%
1.1%
1.0%
1.0%
1.2%
0.5%
0.6%
0.1%
0.3%
0.0%
0.4%
10% 6%
64%
15%
62%
11%
4%
83%
8% 5%
Wt. Avg.*
Decrease more than 10%
51%
23%
13% 4%
70%
60%
16%
Bonus pools
Tuition reimbursement
Decrease 5-10%
50%
31%
Training (internal, external, certifications, CPE,…4%
Vacation/PTO days
40%
33%
Salary employee wages
Employer health care contribution
Decrease 1-5%
30%
89% 92%
Life insurance packages
98%
-0.1%
0.4%
Company vehicle programs
91%
-0.2%
0.0%
* Calculated as increase/decrease >10% as 12.5%, mid-point of all other ranges
On average, suppliers are budgeting for a 4.3% increase to hourly employee wages next year. Additionally, suppliers expect cost pressure across nearly all other benefit offerings.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
2023 Merit Budgets For 2022 and 2023, in the United States, please indicate your company's approved merit increase as a percentage of your total wage budget. (excluding promotional increases and bonuses)
Total
Greater than $1 bils. revenue
2022
2023
Lower Quartile
3.0%
3.0%
Median
4.0%
Upper Quartile
4.8%
68 responses
Average Change
2022
2023
Average Change
0.0% Lower Quartile
3.0%
3.0%
0.0%
3.5%
0.0% Median
4.0%
4.0%
0.0%
5.0%
0.8% Upper Quartile
5.0%
5.0%
0.0%
2022
2023
0.0% Lower Quartile
3.0%
3.0%
4.0%
0.0% Median
3.5%
5.0%
0.3% Upper Quartile
4.3%
28 responses
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Less than $1 bils. revenue
Average Change
40 responses
Employment Issues: Career Path and Succession Planning What types of programs have you implemented or are planning to implement for career path and succession planning amongst your workforce?
0
10
20
30
40
50
Training
80
50 49
Mentorship Programs High Performing Candidate Focus
42
Internal Promotion Focus
31 31
Cross-functional Job Rotation Increased Compensation
27 25
Tuition Reimbursment Leveraging Existing Plans
17 16 16
International Assignments Standardized Formal Development Plans External Talent Focus None
70 67 66
Individual Development Plans
Expat Program for certain positions
60
2 1 Number of Responses
Key themes for career path and succession planning prioritize developing employees internally through training and mentoring, while focusing on high performing candidates and promoting internally.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
25
OESA Human Resources Council
OESA Human Resources Council meetings focus on Talent Management, Succession Planning and other topics included in this quarter’s barometer. If you are interested in learning more about the council, please contact: Ginger Juncker, Vice President, Programming gjuncker@oesa.org / 248.430.5953
Karen Bohannon, Manager Administration and On-site Facilities kbohannon@oesa.org / 248.430.5965
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
26
Appendix Contacts OESA Automotive Supplier Barometer is a survey of the top executives of OESA regular member companies. The OESA Automotive Supplier Barometer takes the pulse of the suppliers' twelve-month business sentiment. In addition, it provides a snapshot of the industry commercial issues, business environment and business strategies that influence the supplier industry. www.oesa.org.
Mike Jackson Executive Director Strategy and Research 248.430.5954 mjackson@oesa.org
RSM US LLP is the leading provider of audit, tax and consulting services focused on the middle market, with nearly 10,000 professionals nationwide. It is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 41,000 people in 116 countries. RSM uses its deep understanding of the needs and aspirations of clients to help them succeed. For more information, visit rsmus.com, like us on Facebook at RSM US LLP, follow us on Twitter @RSMUSLLP or connect with us on LinkedIn.
Joe Zaciek Senior Manager Research and Industry Analysis 248.430.5960 jzaciek@oesa.org
Survey Methodology • • •
Data collected September 21 – October 10, 2022 via invitation to online survey. Executives of OESA supplier companies. 97 complete survey responses were received, with 117 responses total.
The information and opinions contained in this report are for general information purposes. Comments are edited only for spelling and may contain grammatical errors due to their verbatim nature. Responses to this survey are confidential. Therefore, only aggregated results will be reported and individual responses will not be released or shared. Antitrust Statement: Respondents/participants should not contact competitors to discuss responses, or to discuss the issues dealt with in the survey. It is an absolute imperative to consult legal counsel about any contacts with competitors. All pricing and other terms of sale decisions and negotiating strategies should be handled on an individual company basis.
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Larry Keyler RSM Global Automotive Leader 317.805.6205 lawrence.keyler@rsmus.com Original Equipment Suppliers Association 25925 Telegraph Road Suite 350 Southfield, Michigan 48033
27
Appendix: Year-over-year analysis
Q4 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER
Executive Summary
Supplier Barometer
IndexTM (SBI)
SBI Score = 52; up from Q2 level of 44 The index improved slightly from the prior quarter, rising 8 points to a marginally positive reading of 52. The outlook remains polarized however, as 31% of respondents indicate they became more pessimistic over the past three months, while 52% became more optimistic. The outlook is mixed based on revenue size, with the smallest and largest suppliers remaining pessimistic on net, while mid-size suppliers’ outlook improved to optimistic territory.
Production shutdowns due to supply chain shortages and suppliers’ ability to fulfill customer volumes remain the top threats to the 12-month outlook Shortages of semiconductors and other components and materials continue to disrupt the automotive supply base but eased slightly compared to the second quarter. Labor constraints and sales of vehicles in programs supplied are a growing concern.
Automotive suppliers’ diversification remains consistent with last year Median non-automotive revenue estimates remain consistent with last year. Revenue grew in the nonautomotive industrial, agriculture and marine sectors. Revenue from the manufacturing of personal protection equipment is mostly marginal, at about 5% of total on average and grew on net over the past year.
However, suppliers are confident in the strength of the U.S. economy as issues related to the pandemic continue to be less threatening to the supply base and the overall economy.
Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
29
Executive Summary Skills and company cultural gaps widened, as suppliers realize their workers expect a continuation of flexible work arrangements
Scarce labor availability and competition from other sectors accelerated hourly employee turnover to extremely high levels
Executive responses indicate that nearly 50% of suppliers have moderate to wide gaps between their current roles and responsibilities versus skills, up from 34% last year.
50% of suppliers report their turnover rates for hourly employees in the U.S. at above 7.5% while noting that all positions at the plant level are extremely difficult to fill.
Furthermore, 62% of responses indicate that suppliers face moderate to wide gaps between current and expected company culture, up from 50% in Q3 2020.
Suppliers are increasing wages and relying on contract employees to offset the shortage of production workers. However, signing and retention bonuses were the most successful incentive initiatives.
Firms are focusing on increasing internal skill development and changing hiring practices to offset skills gaps, while offering flexibility in work environments and relying on leadership to drive cultural change.
Hiring production workers in states that have ended federal unemployment subsidies has been easier on net, with 63% of responses indicating open requisitions are at least slightly easier to fill.
Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
Developing high performing employees internally, through training, mentorship and cross-functional job rotation, through a structured development plan are the key themes for career path and succession planning.
Cost pressures are mounting as the supply base is budgeting for a 5.4% and 2.9% increase to hourly and salary employee wages, respectively. Additionally, suppliers expect pricing pressure across all other benefit offerings.
Suppliers expect to allow nonoperational employees 2-3 days per week of remote work opportunities, not because of increased performance but because their employees desire the change. Consequently, firms are increasing the role of technology in the workforce. 30
OESA Supplier Barometer: Q3 2021 Results Describe the general twelve-month outlook for your business. Over the past three months, has your opinion become…? Current Supplier Outlook (Share of Respondents) 90
Q3 2021
80 43%
60
31%
50 17%
40 30
Euro Crisis Begins
20
COVID-19 Pandemic
US Trade War Escalates
Japan Tsunami/ Grexit Crisis
Jan-2021
Jan-2020
Jan-2019
Jan-2017
10 Jan-2016
Significantly more pessimistic
Somewhat more pessimistic
Unchanged
Somewhat more optimistic
Significantly more optimistic
0%
Jan-2015
3%
Jan-2014
9% 6%
Jan-2013
8%
Jan-2012
20%
52
Lehman Collapse
Jan-2011
23%
27%
Jan-2010
33%
Jan-2009
40%
US Tax Reform
70
Jan-2018
Q2 2021
60%
Supplier Barometer Index: (SBI and 6m Average)
175 responses
The outlook for the third quarter rose into optimistic territory as production shutdowns due to supply chain shortages eased slightly, while sales performance of programs supplied deteriorated. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
31
OESA Supplier Barometer: Q3 2021 Results By Revenue Describe the general twelve-month outlook for your business. Over the past three months, has your opinion become…? Quarterly 50.0 43.3 49.4 56.0 48.0 53.1 50.9 48.4 44.3 49.2 SBI ∆ May July May July May July May July May July 100% 90%
11%
7%
13%
14%
80% 70%
37%
33%
0%
32%
45%
Significantly more pessimistic
31%
Somewhat more pessimistic 28%
16% 27% 16%
20% 10%
37%
43%
50%
30%
3%
9%
31% 40%
49%
60%
40%
4%
4%
27%
45%
20% 21% 7%
<$50 million
12%
22%
20%
10%
3%
$50-$150 million
32%
38%
4%
3%
$151-$500 million
32% 23%
17%
Somewhat more optimistic
26%
11%
26%
23%
6%
8%
$501 million – $1 billion
Unchanged
Significantly more optimistic 32%
>$1 billion
The outlook is mixed based on revenue size. The smallest and largest suppliers remain pessimistic on net, while the outlook for mid-size suppliers improved to reach optimistic territory. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
32
OESA Supplier Barometer: Industry Threats What are the greatest threats to the industry over the next 12 months? 0%
20%
40%
60%
80%
100%
Average Rating July May
Production shutdowns dueshortages to supply chain… Production shutdowns due to supply chain and issues
2.7
2.5
Inability to fulfill customer volumes (component and raw material Inability to fulfill customer volumes (component and… shortages)
3.0
3.1
Labor Labor availability constraints availability constraints
3.1
3.6
ContinuedContinued issues related to the to COVID-19 pandemic issues related the COVID-19 pandemic
5.0
4.2
Poor sales of sales vehicles in programs supplied Poor of vehicles in programs supplied
5.6
6.4
Implementation of newofgovernment regulations Implementation new government regulations
5.9
5.8
Likelihood of higher interest rates Weakness in the U.S. Economy
5.9
6.3
Weakness in the U.S. interest Economy Likelihood of higher rates
6.0
6.3
6.2
5.6
6.2
6.2
External "black event (geopolitical, natural… External "black swan"swan" event (geopolitical, natural disaster, etc.) Changes in government trade policy Changes in government trade policy 1= Greatest Threat
2
3
4
5
6
7
8
9
10=Smallest Threat
Production shutdowns due to supply chain shortages, and suppliers’ ability to fulfill volumes are the top threats to the 12-month outlook. Suppliers are becoming increasingly concerned over sales of programs supplied. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
33
OESA Supplier Barometer: Industry Segmentation N.A. Industries
Percent of total NA revenue in each Industry Lower Quartile
Upper Quartile
Median
Range
Revenue change over the past year
Number of Responses
Declined Significantly
Declined Slightly
Unchanged
Increased Slightly
Increased Significantly
Net Change
73%
95%
100%
10 - 100%
155
9%
20%
37%
22%
12%
4%
Defense
2%
5%
10%
1 - 30%
20
0%
11%
75%
8%
6%
3%
Non-automotive industrial
5%
10%
20%
1 - 65%
80
3%
4%
44%
35%
15%
44%
Agriculture
4%
5%
10%
0.5 - 40%
32
0%
3%
58%
33%
8%
38%
Marine
2%
5%
10%
1 - 15%
15
0%
0%
73%
23%
3%
27%
Furniture
2%
5%
25%
1 - 40%
7
7%
0%
86%
7%
0%
0%
Computers and NonAutomotive Electronics
4%
5%
21%
1 - 68%
6
0%
0%
84%
16%
0%
16%
Aerospace
2%
5%
10%
1 - 15%
12
0%
12%
81%
8%
0%
-4%
Personal Protection Equipment
3%
5%
13%
2 - 15%
4
0%
4%
79%
8%
8%
13%
Automotive
Automotive revenue as a percentage total remains consistent with last year. Revenue grew in the non-automotive industrial, agriculture and marine sectors. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
34
Roles/Responsibilities vs. Skills - Understanding the Gaps Given competitive hiring pressures and your effort to retain and capture new talent... Are you evaluating the gaps between roles/responsibilities For those indicating ‘yes’ vs. skills in your organization? What is the magnitude How willing are you to embrace the scope of each gap? of change needed to close each gap? No 18%
Wide gap 6%
Yes 82%
Moderate gap 44%
No gap/Aligned 9%
Not applicable Not willing 8% 1% Very willing 47%
Minor gap 41%
Somewhat willing 44%
Skill gaps are widening, with 50% of respondents indicating they have moderate to wide gaps, up substantially from 34% last year. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
35
Roles/Responsibilities vs. Skills - Understanding the Gaps How do you see this changing over the next 1 to 3 years?
What are you doing to adapt your organization to each of these changes? 0 5 10 15 20 25 Increased Training/Skills Development/Re-skilling
23 11
Change in Hiring Practices
Narrowing Gap 32%
Widening gap 34%
6
Increased Flexibility Monitoring and evaluation
4
Retention Initiatives
4 3
Reorganization/Restructuring
No Change 34%
Increased Communication/Collaboration
2
Succession Planning
2
College Recruitment/Coops/Internships
2 Number of Responses
Suppliers are focused on developing talent internally through training or re-skilling, revamping hiring practices and increasing their flexibility. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
36
Current Culture vs. Expected Culture - Understanding the Gaps Given competitive hiring pressures and your effort to retain and capture new talent... Are you evaluating the gaps between current vs. expected For those indicating ‘yes’ culture in your organization? What is the magnitude How willing are you to embrace the scope of each gap? of change needed to close each gap? No 14%
Wide gap 8%
No gap/Aligned 11%
Not applicable Not willing 9% 2%
Very willing 44%
Yes 86%
Moderate gap 54%
Minor gap 27% Somewhat willing 45%
Cultural gaps increased in comparison to 2020. 62% of respondents indicate moderate to wide gaps between their current and expected culture. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
37
Current Culture vs. Expected Culture - Understanding the Gaps How do you see this changing over the next 1 to 3 years?
What are you doing to adapt your organization to each of these changes? 0 5 10 15 20 25 Flexible Work Environments / Schedule / Etc.
21
6
Leadership Reinforcement
Narrowing Gap 42%
Widening gap 34%
No Change 24%
Policy Evaluation / Restructuring Culture
4
Increased Communication
3
No Specific Plan
3
Culture Training
3
Diversity, Equity and Inclustion Initiatives Team Building/Employee Engagement
2 1 Number of Responses
Most suppliers expect their cultural gaps to narrow over the next few years. Many will continue to offer flexible work environments and rely on leadership to drive changes in company culture. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
38
Programs to Attract and Retain Talent How do you see this changing over the next 1 to 3 years? Fewer Programs 3%
What are you doing to adapt your organization to each of these changes? 0 5 10 11
Increased Flexibility
10
Increased Wages / Bonuses / Retention Incentives
7
Talent / Employee Development / Training
No Change 20%
6
Evaluating Policies New Recruiting Initiatives
5
Change in Company Culture
5 4
Internships/Student Recruitment
More Programs 77%
15
3
No Specific Program
2
Increased Communication Increasing Employee Visibility / Engagement
1
Diversity
1 Number of Responses
Suppliers will continue to leverage their flexible work environments as a means of attracting and retaining talent. Increased wages, signing bonuses and retention incentives are being used to attract hourly labor. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
39
Employment Issues: Flexibility Over the past year, high flexibility in both location and schedule has been required to operate amid the COVID-19 pandemic. Which of the following programs does your company expect to retain post-pandemic?
0%
20%
Flexible Schedule
25%
Remote Workplace Policy
31%
Flexible Work Space
18%
Cross-functional Job Rotation
4%
Increased Paid or Unpaid Time-off Allowances
7%
Formally adopted
40%
Planning to retain
50% 36% 26%
60%
80%
100%
62%
5% 8%
51%
12% 5% 5%
27%
59% 8%
Planning to eliminate
59% Never implemented
The pandemic has profoundly impacted how and where people work, with the majority of suppliers planning to retain a flexible work environment post-pandemic. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
40
Employment Issues: Regional Growth Expectations Looking at your current global footprint, how do you anticipate regional employment levels shifting over the next five years? 0% 20% 40% 60% 80% 100% Regional employment will grow faster than the regional share of corporate sales
Regional employment will grow equal to the regional share of corporate sales
Regional employment will grow slower than the regional share Rest of corporate sales
United States
Salary Hourly
Canada
Salary Hourly
Mexico
Salary Hourly
Europe
Salary Hourly
China
Salary Hourly
of Asia Pacific
Salary Hourly
South America
Salary Hourly
16% 14%
45% 56%
8% 7%
40% 30%
37%
56% 53%
40%
31% 34% 13% 5%
49%
40% 58%
10% 46% 36%
38% 33%
51% 59%
16% 18% 8% 11%
20% 56%
11% 8%
62%
22% 71%
43%
11% 49%
58%
31%
Employment growth is expected to outpace the growth in revenue in Mexico and China, while revenue will grow faster than employment in the rest of the world. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
41
Employment Issues: Regional Voluntary Turnover Estimate your year-to-date 2021 voluntary turnover rate for salary and hourly personnel
United States 5%
Salaried Workers Less than 2.5% 2.5 - 5% 5 - 7.5% 7.5 - 10% 10 - 15% 15 - 20% More than 20%
5% 6%
25%
Mexico
3% 7%
4% 11%
8%
37%
12% 52% 23%
27%
16%
25% 30%
Hourly Workers Less than 2.5% 2.5 - 5% 5 - 7.5% 7.5 - 10% 10 - 15% 15 - 20% More than 20%
Canada
2%
6%2% 17%
12%
7%
8% 6%
11%
6%
7% 43%
20%
11%
5%
15% 12%
18%
28%
26%
19%
21%
Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
42
Employment Issues: Labor Acquisition in the U.S. Based on current open requisitions, rate each of the following job classification and positions (most critical to least critical) where you have HR shortages Wt. Avg. 1=Most critical 2 3 4 5=Least critical 0%
10%
20%
Hourly-production
60%
70% 22%
26%
30% 4% 6%
15%
11%
27%
16%
13%
Q3 2020
1.6
2.2
8% 2% 2%
1.6
2.1
8%
2.3
2.4
2.3
2.5
3.5
3.5
3.6
3.8
4.2
4.2
10%
23%
29%
Q3 2021
90%
100%
8% 2%4%
19%
33%
16%
80%
31%
37%
Technicians
Senior Executives
50%
57%
Engineering
General management
40%
64%
Hourly-skilled trades
Sales and marketing
30%
9%
28%
5%
24%
15%
37%
59%
The supply base continues to struggle to attract and retain employees, yet this is most acute for hourly production workers and skilled trades. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
43
Employment Issues: Labor Acquisition in Canada Based on current open requisitions, rate each of the following job classification and positions (most critical to least critical) where you have HR shortages Wt. Avg. 1=Most critical 2 3 4 5=Least critical 0%
10%
Hourly-skilled trades
30%
40%
32%
Hourly-production
32%
11%
Sales and marketing 3%
21% 24%
13%
70%
9%
80% 19%
29%
31%
18%
General management 4%
60%
29%
24%
Engineering
50% 35%
29%
Technicians
Senior Executives
20%
31% 21%
Q3 2021
Q3 2020
3%
10%
2.2
3.0
3%
10%
2.4
3.0
2.4
3.2
2.8
3.1
4.0
4.1
4.1
3.9
4.3
4.6
7%
14%
50%
31%
9%
100%
7% 14%
14%
90%
41%
70%
Hourly worker shortages are spread throughout Canada as well, and worsened in comparison to last year. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
44
Employment Issues: Labor Acquisition in Mexico Based on current open requisitions, rate each of the following job classification and positions (most critical to least critical) where you have HR shortages Wt. Avg. 1=Most critical 2 3 4 5=Least critical 0%
10%
20%
Hourly-skilled trades
40%
50%
34%
Hourly-production
7%
Sales and marketing
4% 4%
20%
15%
4%
3% 13%
15%
34%
12%
35%
56%
100% 7%
10% 13%
11%
30%
12%
90%
34%
28%
21%
17%
26% 24%
80%
20%
33%
22%
General management
70%
35%
25%
Technicians
60%
39%
32%
Engineering
Senior Executives
30%
8%
Q3 2021
Q3 2020
2.1
2.5
2.2
2.6
2.5
2.5
2.6
2.6
3.5
3.7
3.9
4.0
4.0
4.0
Shortages of technical workers are abundant in Mexico as are shortages of hourly production workers; the severity of shortages for hourly workers increased in comparison to last year. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
45
Employment Issues: Filling Open Positions Rate each of the following reasons that you believe prevent you from filling the majority of your open requisitions. 1=Most prevalent 0%
2
10%
20%
Lack of qualified candidates
30%
4
40%
50%
5=Least prevalent 60%
53%
Competition from other industry sectors
14%
Advancement opportunities 3%
28% 31%
18%
Company awareness/reputation 4%
21%
Benefits
7%
16%
Industry reputation
6%
18%
Perceived long-term employment stability
5%
11%
18% 23%
1.8
2.4
10%
2.4
NA
2.9
3.4
3.3
3.1
26%
3.4
3.3
26%
3.5
3.5
3.5
NA
3.6
3.5
3.9
3.9
17%
15%
25%
24%
7% 5%
12%
26%
20%
Q3 2021 Q3 2020 2.2
11%
19%
21%
100%
1.7
23%
32%
18%
90%
12%
38%
Wt. Avg.
8%
20% 26%
21%
5%
80%
33%
30%
Perceived work/life balance
70% 32%
48%
Wages
Position location
3
30% 34% 43%
Lack of qualified candidates remains the top hiring constraint as quality labor remains scarce. Competition for other industries and wage demands remain prevalent. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
46
Employment Issues: Filling Open Positions Has your company implemented any of the following initiatives in order to offset the shortage of production workers? Increased wages
74%
Contract employees
26%
57%
Signing bonus
43%
46%
Retention bonus Increased part-time employees Overstaffing
Increased benefits 0%
Increased benefits
80% 20%
40% Yes
10%
71%
60%
80% No
100%
9%
30%
7%
78%
16%
14%
71%
13%
10%
59% 49%
11% 0%
12%
52%
Overstaffing 5%
76%
20%
Contract employees
Increased part-time employees
66%
24%
13%
Retention bonus
62%
34%
Increased wages
Signing bonus
54%
38%
How successful were the initiatives?
22% 22%
24%
69% 20%
40%
7%
14% 60%
80%
Completely successful
Somewhat successful
Somewhat unsuccessful
Completely unsuccessful
100%
Offering retention and signing bonuses have been the most successful programs in offsetting the shortage of production employees Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
47
Employment Issues: Filling Open Positions Has your company found it easier to fill open requisitions in states that have discontinued federal unemployment subsidies?
Salary positions
12%
Hourly positions
22%
22%
0%
10%
66%
41%
20% 30% 40% 50% 60% 70% Yes, open requisitions are significantly easier to fill
37%
80%
90%
100%
Yes, open requisitions are slightly easier to fill No, open requisitions are just as difficult to fill
Suppliers have witnessed slightly easier hiring conditions in states that have discontinued federal unemployment subsidies for hourly positions while there is less impact on salary positions. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
48
Employment Issues: Engineer Shortages Based on current open requisitions, please rate the type of engineering positions that your organization is having difficulty filling 1=Most critical 0%
2
10%
20%
Electrical Engineer
30%
40%
35%
Software Engineer/Computer Scientist
Aerospace Engineer 0% 12%
24% 29%
6%
60%
70%
24%
80%
17% 17%
28%
24% 12%
50%
Wt. Avg.
5=Least critical
19%
27%
Chemical Engineer
4
31%
40%
Mechanical Engineer
Industrial Engineer
3
17%
4% 9%
Q3 2021
Q3 2020
14%
2.3
2.6
15%
2.4
2.6
2.4
2.6
2.9
3.1
2.9
2.9
4.3
3.5
90%
31%
5%
12%
24%
28%
15%
100%
9%
16%
59%
Electrical, software and mechanical engineers face shortages amid strong demand. Hiring became increasingly difficult in comparison to last year. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
49
Employment Issues: HR Priorities As you plan for 2022, please indicate the level of importance for each of the following priority areas that your organization’s HR function will focus on to support business strategies and growth objectives. Very important=1
2
0%
20%
Wages Wages and and Benefits Benefits
4
Not important=5
40%
60%
41%
Work Work flexibility flexibility
32%
Training/Employee Training/Employee Development Development
32%
27%
80%
40%
40%
Organizational Organizational leadership, leadership, communication communication and and empowerment empowerment
Career Career Development Development & & Succession Succession Planning Planning
3
33%
38%
40%
40%
100% 13%
20%
24%
22%
24%
Wt. Avg. Q3 2021 Q3 2020 1.8
2.7
2.0
2.1
5%
2.0
2.1
5%
2.0
2.1
2.2
2.2
6%
6%
8%
Wages and benefits, and work flexibility are the top HR priorities coming out of the pandemic. Aside from Wages and benefits, other categories are in-line with last year’s level of prioritization. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
50
Employment Issues: Benefits Package Changes For next year, in the United States identify how your benefit packages are expected to change compared to this year. Increase more than 10%
Increase 5-10%
Increase 1-5%
No Change
0%
20%
10%
Hourly employeewages wages Hourly employee
14%
Salary employeewages wages Salary employee
Vacation/PTOdays days Vacation/PTO
11% 8% 4%
Tuition reimbursement Tuition reimbursement Company vehicle programs Company vehicle programs
60%
70%
Wt. Avg.*
Decrease more than 10% 80%
90%
100%
54%
Q3 2021
Q3 2020
5.4%
NA
2.9%
NA
2.2%
0.4%
1.2%
-1.2%
1.0%
0.8%
0.6%
0.3%
0.4%
-0.1%
0.4%
0.0%
0.3%
-0.3%
0.0%
-0.5%
6% 14%
28%
50%
19%
59%
23%
63%
9%
insurance packages LifeLife insurance packages 401(K)match match 401(K)
Decrease 5-10%
50%
71%
16%
Bonuspools pools Bonus
40%
30%
12%
Training (internal, (internal, external, certifications, CPE, etc.) 4% Training external, certifications, CPE,…
Employer health care contribution Employer health care contribution
Decrease 1-5%
30%
6% 4%
84% 94%
9% 7% 7%
89% 86% 87%
* Calculated as increase/decrease >10% as 12.5%, mid-point of all other ranges
On average, suppliers are budgeting for a 5.4% increase to hourly employee wages next year. Additionally, suppliers expect pricing pressure across all other benefit offerings. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
51
Employment Issues: Career Path and Succession Planning What types of programs have you implemented or are planning to implement for career path and succession planning amongst your workforce? 0
20
40
60
80
100 95
Training
91
Individual Development Plans
61
High Performing Candidate Focus
57
Internal Promotion Focus
53
Mentorship Programs
44 44
Cross-functional Job Rotation Increased Compensation
41 41
Leveraging Existing Plans Tuition Reimbursment
25 23
Standardized Formal Development Plans International Assignments
15
External Talent Focus
5
None
Other
1 Number of Responses
Key themes for career path and succession planning prioritize developing employees internally through training, mentoring, cross-functional job rotation and individual development plans. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
52
Employment Issues: Remote Work Which of the following skill teams will your company allow to work remotely post pandemic? No remote work allowed
Yes, 1-day per week
Yes, 2-days per week
Yes, 3-days per week
Yes, 4-days per week
Yes, with no restrictions
0% Sales/Marketing
10% 17%
5%
Accounting/Finance
10% 4%
HR/Communications
10% 4%
Purchasing/Supply Chain Management C-suite Engineering/R&D
12%
20%
30%
50%
29%
44% 36% 6%
Plant Management
70%
80%
100%
19% 10%
Wtd. Avg. 2.9
8%
2.5
27%
4%
9%
2.4
25%
5%
9%
2.3
17%
42%
59%
90%
14% 26%
47%
25%
60% 26%
43%
5%
21%
40%
6% 19%
26%
14%
2.2
3% 9%
2.0
7% 3% 4%
0.7
Sales and marketing employees will be given the most flexible remote work environment post pandemic. Plant managers and engineers will need to work in-person more than their colleagues. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
53
Employment Issues: Remote Work Has the remote work environment fostered any new distributed teams or workflows that you see as a net-benefit to your organization? 0
Yes 36%
No 64%
5
Yes, no elaboration
4
Efficiency Gains
4
10
15
20
3
Cost savings Increased hiring/retention
1
Increased collaberation
1
18
No, no elaboration
Number of Responses
On net, supplier responses indicate no material gains to their organization. Those that indicated a net-benefit pointed to increased efficiency and cost reduction. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
54
Employment Issues: Remote Work Has your company planned on or witnessed any of the following? 0%
10%
20%
30%
Employees desiring increased remote work options in order to stay with your company post-pandemic?
50%
60%
70%
76%
Increasing the role of technology in the workforce (i.e., industry 4.0 and internet of things)?
42%
Considered redesigning office space for "hybrid work"?
42%
No
80%
90%
16%
59%
Employees desiring more in-person work or collaboration postpandemic?
Yes
40%
23%
42%
42%
100%
8%
18%
15%
17%
Unsure
Employees desire increased remote work options in order to stay with their company post-pandemic. Suppliers are responding by planning to increase the role of technology in the workforce. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
55
Employment Issues: Cyber-Security Given the remote work environment and the increasing rate of cyber-attacks… Has your company taken actions to mitigate the risk of a cyber-attack?
What actions specifically?
No 2%
0 Unsure 7%
5
10
15
20 20
Improved IT systems/processes
18
Employee training/awareness Multi-factor authentication/VPN
7
Screening software
7 5
Outside consulting/monitoring
Yes 91%
2
Additional security measures Cybersecurity insurance
25
1 Number of Responses
Suppliers are well aware of the rising rates of cyber-attacks, and have improved their IT systems and processes while increasing employee training and awareness. Q3 2021 OESA AUTOMOTIVE SUPPLIER BAROMETER
56